Oregon Lottery: The Internet takes gambling into living rooms

For a glimpse at the next frontier of state lottery gambling, take a look at Delaware.

This month, the state became the first in the nation to launch full-on casino gambling over the Internet. If you’re in Delaware, you can fire up your iPad, tap in your credit card number and start playing virtual slot machines, blackjack, roulette or poker from the comfort of your living room or hotel suite.

“This is the future,” says Vernon Kirk, director of the Delaware Lottery, which oversees the new online casino betting. Delaware may be out in front, but other states are sure to follow, Kirk says.

Sure enough, the toe-dipping has already begun by some states, including Oregon. That worries problem-gambling experts, who say easy access helps drive addiction.

“What appears to be known is, as the opportunity to gamble increases, more people gamble and more people become problem gamblers,” says Tom Moore, who has done extensive research on problem gambling for Herbert & Louis, a Wilsonville firm that studies addictive behavior. “We’re on the verge of a dangerous position.”

New Jersey began offering various forms of Internet gambling this week, although it uses private casinos rather than the state lottery. Nevada, which has no lottery, offers online poker through private casinos.

State lotteries, however, are moving in the same direction. In Georgia, lottery players can register for “i-Hope” cards to buy scratch-off tickets online. The Illinois Lottery also has online ticket sales. Michigan, California and Iowa lotteries are looking at potential online ventures.

Oregon doesn’t sell lottery products online, but Keno players can buy tickets for future games they can watch from a laptop or mobile phone.

“Wait and see”

Oregon’s first attempt at testing the online gambling waters proved disastrous. Oregon Lottery staff spent months and tens of thousands of dollars working on a new Internet portal – viewed by many as a stepping stone toward online gambling -- before it imploded. The ORcade, as it was called, was abandoned after news coverage raised concerns that it targeted underage players.

The Oregon Lottery now is “taking a wait-and-see” approach to online gambling, spokesman Chuck Baumann says.

That doesn’t mean the agency is ignoring the potential of the Internet, as its 2014 Video Lottery Marketing Plan makes clear.

“The Lottery also continues to be prohibited from offering its line and poker games online, which further limits our ability to appeal to a broader, younger market segment,” the plan notes. In a segment gauging the agency’s “weaknesses” and “opportunities,” the marketing plan notes that companies that sell video slot and poker games have purchased Internet gaming companies, and that “provides an entry path to Internet gaming by the Lottery.”

The lottery’s 'key insights'

From the Oregon Lottery’s “Strategic Plan” for 2014-19:

• Consumers do not know that line games [vide slots] offer a similar gaming experience as the casino games they know and play.

• Consumers believe that both video and Keno are inconveniently located and not in venues they frequent.

• Younger adult consumers think lottery games are for older people; they want a more social, more technologically relevant experience.

• Jackpot awareness continues to be the single greatest motivator of draw game sales; however Jackpot desensitization has begun to have an effect.

Gov. John Kitzhaber, who appoints the Lottery Commission and its director, takes a hard line against Oregon entering the online gambling market .

“I wouldn’t support it,” Kitzhaber says. “To the extent I have the levers to say ‘No,’ I would use them.”

But Kitzhaber’s distaste for gambling as a state revenue source hasn’t always kept a lid on the Oregon Lottery. As state Senate president in 1991, Kitzhaber worked a deal with Republican leaders to approve video poker, allowing the machines to spread across the state.

During his first term as governor, he opposed adding electronic slot games, but they were brought in after he left office. Now, he says, he’s OK with the lottery’s $250 million plan to replace all 12,000 machines with state-of-the-art models

Federal ruling

A 2011 U.S. Justice Department ruling opened the door to state-based online gambling by declaring that such operations don’t violate the federal Wire Act. Lottery commissions around the country sensed not just opportunity but the potential for an online arms race.

For problem-gambling counselors, the prospect of widespread Internet betting through state lotteries raises serious concerns.

Online gambling poses risks not only to problem gamblers who are trying to recover but to tech-savvy underage players able to thwart age restrictions and other barriers, Moore says.

State lotteries could come under tremendous pressure to go online as a way to increase revenue, especially if neighboring states take the plunge.

“That’s the dilemma,” Moore says. “The lottery is probably the only profitable arm of government. It becomes a real political decision of how high we are going to turn the throttle.”

Keith Whyte, executive director of the National Council on Problem Gambling, says it’s hard to tell what kind of risks or benefits online gambling offers because state lotteries won’t do the necessary research.

“Not to be cynical, but perhaps that’s because the states make so much money,” Whyte says. “We don’t have the money to do that kind of rigorous research,” but state lotteries do.

&amp;amp;amp;amp;amp;lt;a href="http://polldaddy.com/poll/7600478/"&amp;amp;amp;amp;amp;gt;If Oregon offered online gambling, such as poker, slots or blackjack, would you play?&amp;amp;amp;amp;amp;lt;/a&amp;amp;amp;amp;amp;gt;On one hand, online gambling offers the possibility of better controls on who gambles and how much, he says. On the other, it’s just another easy-to-use platform for gamblers at risk of addiction. It’s unclear, he says, whether online gambling would worsen an already bad problem.

“The state is an operator and profiter,” he says. “It has an ethical and economic obligation to learn the answers to some of these questions.”

Jon Griffin of the Colorado-based National Conference of State Legislatures tracked online gambling legislation in 19 states this year. His findings: A handful of bills were introduced to prohibit online gambling, while far more lawmakers -- from Massachusetts to Hawaii -- sought laws to legalize it. It’s a trend he expects to continue.

“States have only had two years to think about this,” Griffin says.

They better think fast, says Kirk, the Delaware Lottery director. Any gambling innovations that come down the pike over the next few years are going to involve cyberspace, he says.

“We will be more prepared than a state that is starting from scratch,” Kirk says. “If you don’t get started now, you’re going to be left behind.”

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